Bulgarian Real Estate?

Bulgarian Real Estate?

April 25, 2005

This is in the small world department. I received an email today in CT trying to sell me a sale-leaseback interest in a Bulgarian resort hotel on the Black Sea coast.

The interesting thing is the pricing, $150K-500K for a one-bedroom condo, and a 7-8% cash yield. The price is higher and the yield lower than you might expect.

The Internet has made communications and advertising so cheap and reduced transactions costs to the point where arbitrage is very fluid today. That’s why multiples in the US, China, and the Arab markets are all within a club length.

The US is not a closed economy any more. Foreign investment risk is decreasing and capital is moving where it earns returns and is appreciated. This is an unstoppable force driving returns, prices, and wages closer together. So when the market gets worried about the return of inflation here, like they did last week, they are making a mistake; take their bet every time.

And no, I am not going to buy property in Bulgaria.


John Rutledge

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